Chico Municipal Airport Catchment Area Analysis Results
Table of Contents Chico market overview 4 Comparative market analysis 9 Regional airport discussion 14 CIC catchment area results 19 2
Executive Summary The Chico metropolitan area population of 225,000+ ranks similar to a number of markets across the U.S. with non-stop air service However, previous Chico air service struggled to generate industry average revenue performance Based on data from comparable markets as well as more detailed information as reported by the U.S. DOT and ARC, we can project Chico air travel demand including market-specific estimates We estimate a total annual Chico demand figure of 682 PDEWs with Los Angeles, San Diego, Seattle, and New York as top destinations In addition, we estimate that 75% of total Chico demand currently travels from Sacramento/SMF although SFO carries the majority of international traffic If CIC can capture 20% of local demand assuming a single carrier of operation at the airport it will likely be able to support a 2x/daily pattern with a 70-seat aircraft 3
Chico market overview
Chico s metro population has recently trended relatively flat 240 Chico metropolitan area population (thousands) 220 2015 MSA population of 225,000+ ranked #197 among metro regions Recent population growth has been modest only 2% in aggregate over the past five years Sacramento now ranks as the #27 MSA with 2.3 million residents 200 180 160 140 120 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Woods & Poole, 2016 / U.S. Census Bureau 5
Scheduled service from Chico ceased in 2014 Deps 4.5 CIC average daily service capacity Seats 140 4.0 120 All recent service was branded as United with 30-seat EMB-120 turbo prop aircraft Service levels had been reduced prior to the 4Q14 cessation of service 3.5 3.0 2.5 2.0 1.5 1.0 0.5 100 80 60 40 20 0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 - Daily departures Daily seats Source: Innovata schedule data via Diio online portal 6
Chico s load factor trailed overall domestic averages CIC/U.S. rolling 12 month load factor data 100% 90% 80% Chico s rolling 12 month load factor at the cessation of service was just under 63% Overall domestic industry load factor has plateaued at 85% Service patterns and local fares can directly impact these figures 70% 60% 50% 40% 30% 20% 10% 0% '03 '06 '09 '12 '14 CIC U.S. aggregate Source: US DOT/T100 data via Diio online portal 7
while fares had improved by the cessation of service $250 CIC rolling four quarter domestic fares Adjusted to 1,000 miles $200 Chico domestic fares trailed US averages through much of their service period However, fare performance exceeded domestic averages* by 2013-14 (on reduced service levels) $150 $100 $50 $0 2003 2006 2009 2012 2014 CIC US * All data and comparisons adjusted to 1,000 mile stage length Source: US DOT O&D data via Diio online portal 8
Comparative market analysis
We examined a basket of markets with demographics similar to CIC 260 Selected U.S. airports: regional population profiles 250 240 Each of the markets to the right (other than CIC) currently offer scheduled commercial air service Regional population in this group ranges from roughly 200k to 250k 230 220 210 200 190 180 YKM BGM CLL YUM CIC TYR RST SPI FLO Source: Woods and Poole 2016 10
These markets offer a variety of traffic and service patterns Glossary of columns Miles to medium/long-haul hub Non-stop destination count Daily departures 2016 O&D passengers Service and passenger traffic at CIC peer airports Markets similar to Chico based on MSA population Miles # of Daily 2016 Airport Code to MH/LH N/S dest. deps. O&D pax Roches ter RST 76 3 13 216,729 Springfield SPI 84 4 5 183,540 College Station CLL 74 2 6 147,038 Yuma YUM 150 1 4 142,451 Yakima YKM 103 1 4 137,217 Binghamton BGM 141 1 3 134,860 Tyler TYR 91 1 4 104,709 Florence FLO 91 1 4 89,947 Source: US DOT and Innovata schedule data via Diio online portal 11
Evaluating these markets can estimate CIC market potential Travel propensity reflects each market s ratio of O&D traffic to regional population This group of eight markets was chosen to reflect a diverse set of market conditions albeit with similarities to Chico Market specific results reflect this wide range of conditions Travel propensity at CIC peer airports Reported Est. capture Catchment Travel Airport Code Population O&D pax rate area traffic propensity Rochester RST 215,175 216,729 35% 619,226 2.88 Springfield SPI 212,063 183,540 35% 524,399 2.47 College Station CLL 246,231 147,038 35% 420,108 1.71 Yuma YUM 226,444 142,451 35% 407,004 1.80 Yakima YKM 249,147 137,217 35% 392,049 1.57 Binghamton BGM 246,980 134,860 35% 385,313 1.56 Tyler TYR 221,871 104,709 35% 299,169 1.35 Florence FLO 208,691 89,947 35% 256,992 1.23 Total / average 1,826,602 1,156,491 35% 3,304,260 1.81 Source: Woods and Poole 2016; US DOT data via Diio online portal 12
We project a CIC catchment area population of 275,000+ ACV RDD Blue = Chico MSA Green = expanded catchment area region Note that the entire shaded region is considered the CIC catchment area for the purpose of our analysis CIC Other CIC Catchment Area MSA RNO STS SMF SFO OAK SJC CIC catchment area - projected passenger traffic Catchment Travel Population area traffic propensity PDEW CIC proxy markets (average) 228,325 413,032 1.81 Chico MSA 225,307 407,573 1.81 557 Other CIC catchment area 50,530 91,407 1.81 125 Total CIC catchment area 275,837 498,980 1.81 682 Source: Woods and Poole 2016; US DOT data via Diio online portal 13
Regional airport discussion
Regional population varies across nearby markets 5,000 Regional MSA population totals 4,500 4,000 Regional Bay Area population now exceeds 4.5 million population not including the South Bay/San Jose Incorporating the South Bay drives the total to over 6 million residents 3,500 3,000 2,500 2,000 1,500 1,000 500 - SF/OAK S'mnto San Jose Santa Rosa Reno Chico Redding Note: no distinct MSA for the ACV region Source: Woods and Poole 2016 15
Four regional airports drive more than 10 million annual passengers 16,000,000 Regional airport traffic profiles 14,000,000 SFO=51.5 million 12,000,000 While SFO is clearly the region s preeminent airport, OAK/SJC/SMF drive competitive service patterns STS/ACV/RDD remain much smaller competitive threats 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - SFO OAK SJC SMF RNO STS ACV RDD Source: US DOT data via Diio online portal 16
SMF drives a large service profile within a reasonable drive ACV RDD CIC RNO CIC Neighboring Airport Profile SMF Drive Daily time Departures Seats STS RDD 1:10 4 185 SMF 1:35 139 18,622 OAK 3:01 154 22,978 SFO 3:10 590 92,940 OAK RNO 3:10 58 6,986 STS 3:20 11 784 SFO SJC SJC 3:28 164 22,149 ACV 4:16 6 270 Source: US DOT and Innovata schedule data via Diio online portal; mapquest.com 17
Capacity growth has recently resumed at SMF Recent SMF capacity data 160 20,000 SMF will operate over 160 peak day/peak month departures (July) on nine carriers SMF s annual domestic load factor of 84% is roughly in line with industry totals SMF s domestic O&D fare* of $158 is also roughly in line with aggregate industry figures 140 120 100 80 60 40 20 15,000 10,000 5,000-2012 2013 2014 2015 2016 2017 - Departures Seats * adjusted to stage length of 1,000 miles Source: US DOT and Innovata schedule data via Diio online portal 18
CIC catchment area results
CIC annual O&D demand is estimated at just over 680 PDEW Aggregate PDEW estimates are driven by previously discussed propensity to travel data We utilize ARC data to further refine this data to airport and market levels throughout the coming pages Summary Projected CIC Demand Chico catchment area population 275,837 Estimated propensity to travel 1.81 Estimated annual O&D demand 498,980 PDEWs 682 Source: Internal InterVISTAS analysis 20
An estimated 75% of Chico passengers utilize SMF Chico market: projected current airport usage 80% 75% 70% Heavy SMF usage estimates are driven primarily by proximity and robust schedule profiles The three Bay Area airports in total comprise 21% of total Chico usage 60% 50% 40% 30% 20% 19% 10% 0% 2% 1% 1% SMF SFO RNO OAK SJC Other 2% Source: Internal InterVISTAS analysis 21
SFO s international service profile drives heavy Chico usage 90% Chico region projected domestic passenger usage 70% Chico region projected international passenger usage 80% 80% 60% 58% 70% 60% 50% 50% 40% 38% 40% 30% 30% 20% 20% 10% 13% 2% 1% 1% 2% 10% 2% 2% 1% 0% SMF SFO RNO OAK SJC Other 0% SMF SFO OAK SJC Other Source: Internal InterVISTAS analysis 22
LAX represents the largest projected O&D market from Chico CIC's top 20 largest O&D markets CY 2016 City / O&D Chico Alternate airports share of CIC passenger demand Rank Code market O&D SMF SFO RNO OAK SJC Other Total 1 LAX Los Angeles 31,765 88% 9% 1% 1% 1% 1% 100% 2 SAN San Diego 27,786 76% 16% 2% 0% 0% 6% 100% 3 SEA Seattle 26,353 94% 2% 2% 1% 0% 1% 100% 4 NYC New York 22,097 71% 22% 3% 1% 2% 1% 100% 5 LAS Las Vegas 21,921 59% 39% 0% 0% 1% 0% 100% 6 SNA Orange County 20,856 67% 13% 13% 0% 0% 7% 100% 7 BUR Burbank 17,096 75% 25% 0% 0% 0% 0% 100% 8 PDX Portland 16,816 79% 6% 1% 3% 1% 11% 100% 9 ONT Ontario 16,177 50% 20% 10% 0% 0% 20% 100% 10 PHX Phoenix 15,651 85% 12% 1% 2% 1% 0% 100% 11 DEN Denver 13,883 81% 9% 6% 0% 2% 1% 100% 12 CHI Chicago 13,046 63% 31% 4% 1% 1% 1% 100% 13 DFW Dallas 10,793 77% 19% 3% 0% 1% 0% 100% 14 WAS Washington 9,232 85% 12% 1% 2% 0% 2% 100% 15 BOS Boston 8,429 81% 17% 0% 2% 0% 1% 100% 16 ATL Atlanta 7,346 93% 6% 1% 0% 0% 0% 100% 17 LGB Long Beach 7,336 93% 1% 1% 5% 0% 0% 100% 18 HNL Honolulu 6,304 61% 11% 0% 22% 6% 0% 100% 19 SLC Salt Lake City 6,262 89% 7% 0% 3% 0% 2% 100% 20 HOU Houston 6,246 92% 4% 3% 0% 0% 0% 100% Subtotal Top 20 305,398 77% 15% 3% 1% 1% 3% 100% Total 498,980 75% 19% 2% 1% 1% 2% 100% Source: Internal InterVISTAS analysis 23
Regional western markets dominate top Chico destinations Top CIC O&D markets w/projected 2016 passengers via SMF O&D Percent Rank Market pax of total 1 Los Angeles 27,908 7.5% 2 Seattle 24,877 6.7% 3 San Diego 21,064 5.6% 4 New York 15,784 4.2% 5 Orange County 13,904 3.7% 6 Phoenix 13,260 3.5% 7 Portland 13,222 3.5% 8 Las Vegas 12,900 3.5% 9 Burbank 12,822 3.4% 10 Denver 11,183 3.0% Other 206,700 55.3% Total via SMF 373,624 100% Top CIC O&D markets w/projected 2016 passengers via SFO O&D Percent Rank Market pax of total 1 Las Vegas 8,633 9.3% 2 New York 4,840 5.2% 3 San Diego 4,482 4.9% 4 Burbank 4,274 4.6% 5 Chicago 4,002 4.3% 6 Ontario 3,235 3.5% 7 Los Angeles 2,875 3.1% 8 Orange County 2,781 3.0% 9 Dallas/Fort Worth 2,076 2.2% 10 Phoenix 1,848 2.0% Other 53,309 57.7% Total via SFO 92,354 100% Source: Internal InterVISTAS analysis 24
SMF drives lower fares from CIC passengers than does SFO Average domestic fares CIC's top 20 O&D markets via Rank Code Market SMF SFO SMF drove on average a 16% lower domestic fare than SFO for Chico area passengers 1 LAX Los Angeles $105 $107 2 SAN San Diego $121 $114 3 SEA Seattle $102 $126 4 NYC New York $220 $290 5 LAS Las Vegas $127 $80 6 SNA Orange County $119 $114 7 BUR Burbank $117 $113 8 PDX Portland $107 $113 9 ONT Ontario $119 $125 10 PHX Phoenix $155 $105 11 DEN Denver $177 $143 12 CHI Chicago $234 $190 13 DFW Dallas $206 $168 14 WAS Washington $261 $300 15 BOS Boston $217 $284 16 ATL Atlanta $236 $258 17 LGB Long Beach $78 $79 18 HNL Honolulu $287 $268 19 SLC Salt Lake City $162 $142 20 HOU Houston $240 $262 Top 20 average $143 $184 Average domestic $167 $200 Source: Internal InterVISTAS analysis; US DOT data via Diio online portal 25
West Coast markets drive 40+% of Chico traffic Chico catchment area projected passengers by region CY 2016 West Coast 42.5% SMF: 75.4% SFO: 14.1% Mountain 5.6% SMF: 86.1% SFO: 6.6% Central 3.5% SMF: 89.3% SFO: 8.6% Great Lakes 6.1% SMF: 76.7% SFO: 18.9% Northeast 11.9% SMF: 80.9% SFO: 14.7% International 11.7% Southwest 9.7% SMF: 85.6% SFO: 10.9% Southeast 5.5% SMF: 92.8% SFO: 6.4% U.S. Territories 0.2% SMF: 55.1% SFO: 44.9% Florida 3.3% SMF: 78.5% SFO: 20.0% Source: Internal InterVISTAS analysis 26
A 20% CIC airport capture rate would drive 136 PDEW Estimated total CIC PDEW at various airport capture rates 400 350 341 An estimated 20% capture rate could support a 2x 70-seat daily pattern assuming 100% carrier market share This conclusion assumes fares consistent with current regional airport levels 300 250 200 150 100 68 102 136 170 204 239 273 307 50 0 10% 15% 20% 25% 30% 35% 40% 45% 50% Source: Internal InterVISTAS analysis 27